Global Fastener News

Chicago Rivet Achieves Profit Amid Auto Slump

Jason Sandefur

Chicago Rivet & Machine Co. returned to profitability in 2006, with the company reporting full-year net income rose to $1.12 million compared with a $398,612 loss during 2005. Net sales grew 1.5% to $40.4 million amid a continuing slump in the North American auto industry that worsened during the second half of 2006.
Chicago Rivet said results in 2006 were hurt by costs related to closing its fastener manufacturing facility in Jefferson, IA, which it shuttered during fourth quarter. Production is being transferred to its plant in Tyrone, PA. The company recorded a charge of $422,934 related to the plant closing.
Fastener segment sales grew 1.4% to $34.42 million during 2006, boosted by double-digit gains during the first six months. Chicago Rivet described second half fastener results as “particularly weak,” with sales in the third and fourth quarters declining 8.4% compared to the prior year.
“The up and down results were tied to changes in demand from our larger automotive customers,” the company stated. “Production cuts by domestic automotive companies, in response to high inventory levels and reduced sales forecasts, were largely responsible for the weakness we experienced in the second half of the year.”
Fastener segment profit soared $2.3 million to a total of $2.45 million during 2006, aided by higher sales volume and the decline of two expense items that had large increases in 2005. Tooling expense declined by more than $1 million during 2006, as cost controls were emphasized and better tool life was achieved during the year. Tooling expenses had risen by $518,000 in 2006. In addition, expediting costs during 2006 declined by $130,000, returning to more normal levels after a $253,000 spike in 2005 for costs related to “shortened customer lead-time requirements.”
Likewise, material cost of sales declined $396,000, primarily due to lower average steel prices during 2006.
The company noted challenges it faces in 2007.
“Customer demand for higher quality and lower prices continues unabated. While we have obtained sales from customers that supply the import brands, we will need to further penetrate that market to offset production cuts of the domestic brands. Our ability to increase revenues as well as diversifying our customer base will be a significant factor in our future growth.”
Chicago Rivet ended 2006 with no outstanding debt. Web: chicagorivet.com �2007 FastenerNews.com